Tuesday, November 6, 2007

Big Pricing Experiment

We decided to do a pretty major pricing experiment. After talking to several people at the shareware conference--we decided to do the opposite of what everybody said.

For a few years, our upgrade policy was "2 years, all upgrades are free" with a $29.95 price. (Before that, it was "free for life"--something I'd do differently. We haven't charged for an upgrade yet.)

The recommendations we got at SIC were to offer a more expensive option with a longer upgrade time. What we did was offer a cheaper version with a lower upgrade time.

"1 year, all upgrades are free"I've been keeping track of the "Dollars Per Day" (DPD) in Excel. Using a time at the end of June and beginning of July just before we made changes as a base.

We started with the 1 year option at $16.95. I could immediately see that we sold more copies--about 60% of the people choose the cheaper price! But in the end, the big question is did we make more money. We stayed at that $16.95 price for 2 months. At the end, it works out to being at 87% of the base DPD amount. So we made less.*

On October 1, we changed so the 1 year option increased to $19.95. At that higher price, we made 97% of the base DPD amount. So very slightly less.

BUT, these people understand when buying that we're going to charge them an upgrade fee sooner rather than later. So we really are hoping that a little less now works out to more in the long term. Sometime in early 2008 we need an "upgrade worthy" new version--and we'll charge for it.